Impacts and evolution of emissions trading systems : insights from research and regulation

Abstract

As part of the LIFE COASE project, the first Net Zero Carbon Market Policy Dialogue (NZCMPD) was held in September 2023 to discuss the latest developments and challenges faced by carbon market regulators across the world. This event focused on competitiveness effects, carbon leakage, distributional effects, and social implications of emissions trading systems (ETSs) and brought together researchers, regulators and stakeholders. To inform the debate, a background report was shared with the participants ahead of the event. The present document synthesises both the background report and key points which emerged from the Policy Dialogue. The first chapter gives an overview of existing carbon pricing mechanisms and outlines the trends of carbon markets in 2023. The second chapter compares ex-ante permit trading models, and the third chapter summarises insights gained from assessing the ex-post impacts of emissions trading. The NZCMPD highlighted the challenges currently faced by experts assessing permit markets and the potential research gaps that still need to be addressed.